Letters To The Editor

     Print Edition: April 2012

I read the story on small- and mid-cap stocks (Time to take a Glance, March 2012) with interest since I am a regular investor in the stock market. I have some exposure to large- and mid-cap stocks but generally avoid the small-cap universe since it is the riskier end of the spectrum. The research information available on small-cap stocks is limited as compared with mid- and large-cap counterparts. While it is a possibility that some small caps may become multi-baggers in the future, an investor has to be really lucky to make the right calls and strike gold. An investor should ideally have a healthy mix of stocks in his portfolio with exposure to the small-cap universe relative to his risk appetite. The risk of losses is very large for someone with a high small-cap stocks skew.

The guest column on careers (When to quit a job, March 2012) gave a very balanced view on when to quit and when not to be driven by impulses or minor irritants in deciding to leave a job. However, many people remain stuck in their jobs purely because they are not confident of being able to find another one that provides similar compensation and a better job profile. The key, I believe, is to constantly upgrade one's skills to remain in demand in the job market, which fortunately is increasing in size with the growth in the economy. Moreover, one should also keep informed of new job openings to know whether skills are in demand. Finding a new job is a laborious process that needs to be dealt systematically. Of course, one should always be willing to change jobs if better career opportunities are available.

The story on how investors should view small-cap funds (Placing Small bets, February 2012) was interesting. However, I think investors should be careful with these funds since the small-cap stocks in which these funds invest are riskier investments compared with their mid-cap or large-cap counterparts, especially in an uncertain market. One should allocate only a small portion of a portfolio to such funds if one does not have a large risk appetite as the downside risk is quite high. Even with a large enough risk apetite, investments should be controlled and made only after due diligence is done.

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